CCPC welcomes the publication of the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Bill 2021

July 9, 2021

The Competition and Consumer Protection Commission (CCPC) welcomes the publication of the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Bill 2021 (the Bill) which brings in additional regulation and consumer protections across newer and emerging credit products and companies. This includes non-cash loans and circumstances where credit is provided indirectly to the consumer, such as ‘buy now, pay later’ agreements when shopping for goods.

Personal Contract Plans

The CCPC particularly welcomes the extension of Central Bank regulation to Personal Contract Plan (PCP) finance, addressing issues highlighted by the CCPC 2018 report: Personal Contract Plans: The Irish Market.. The report examined the PCP market, and in particular the sale of new cars to private consumers.  The CCPC found that PCP products may look like traditional hire purchase agreements but are much more complex with consumers often unaware of exactly how the agreements work and the extent of their liability. While some PCP products are underwritten by regulated companies, PCP products themselves are not currently explicitly regulated by the Central Bank and are frequently sold by credit intermediary companies who are not obliged to carry out suitability and affordability checks on consumers.

The Bill provides that a provider of “credit”, “hire-purchase agreements” and “consumer-hire agreements” will have to be authorised as a “retail credit firm” by the Central Bank. This will bring these companies within the scope of the Consumer Protection Code and ensure that these consumers have the same protections as consumers who purchase traditional types of financial products, such as car loans and personal loans. These consumer protections help consumers to make better informed decisions about financial products while also protecting them from entering into unsustainable debt arrangements that they are unlikely to be able to repay.

Regulation of Credit Intermediaries

The CCPC notes that, despite the significant role often played by credit intermediaries[1] as the party who actually sell the credit product to a consumer, the Bill has not brought credit intermediaries under the remit of the Central Bank like other entities in the credit process.  This means that credit intermediaries will continue to fall outside of the Central Bank’s Consumer Protection Code. Credit intermediaries are currently subject to a very limited statutory authorisation regime by the CCPC that does not require adherence to a code of conduct or a consumer protection code. The CCPC has expressed, and retains the view this Bill provides an opportunity to resolve this inconsistency and centralise the regulation of all those involved in the provision of credit to consumers under the robust supervisory frameworks of the Central Bank.

Commenting on the Bill, Isolde Goggin, Chairperson of the CCPC said:

The CCPC welcomes the publication of this Bill as a positive step in protecting consumers when they enter in to these very common credit arrangements. Consumers today avail of credit in range of ways that are far from the traditional application for a personal loan in a bank or a credit union. Consumers regularly use PCP agreements to buy cars, use ‘buy now, pay later’ agreements when shopping online and enter into hire purchase agreements when purchasing furniture and domestic appliances. It’s crucial that the same thorough and consumer focused approach is taken to protect consumers when they enter in to these credit arrangements as is currently required of banks and other financial institutions. Consumers should only be provided with credit when it is suitable to their needs, they understand the risks and the total cost, and most importantly of all, they are able to repay the debt.

[1] A person, other than a credit institution or a mortgage lender, who is an authorised credit intermediary under Part XI of the Consumer Credit Act 1995

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